Samvat 2077 Begins: What Lies Ahead for Indian Stock Markets?

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Dear Reader,

Let us start of by wishing you a very Happy Diwali and a prosperous year ahead.

As Samvat 2076 comes to an end, let us take a moment to review the year gone by.

It was one historic and volatile year for equity investors.

Benchmark indices rose till January 2020 and then came the doom.

We had one of the scariest periods with the news of Covid-19 in March. The market crashed nearly 40% in just two months.

Around the same time, almost every country including India announced complete lockdowns.

The economy came to a halt. Everyone expected things to get even worse for the stock markets. People were advised to stay in cash or gold and wait for a better opportunity.

If only predicting the markets were so easy!

And last but not the least, we had the US Presidential elections.

All in all, market participants were in for a rollercoaster ride in Samvat 2076.

As things stand today, the Sensex is trading above the 43,000-mark.

The Nifty is less than 300 points away from the 13,000-mark. In case you forgot, the Nifty's closing low on 23 March, was 7,610!

Such is the nature of stock markets.

As for the Samvat year 2076...

In the Samvat year gone by, the Nifty returned nearly 10% return and Sensex 11%, and this growth was also seen across individual stocks. This is why Samvat 2076 remains as an unforgettable year.

This begs the question: Will This Uptrend Continue in Samvat 2077?

Looking at the current stock market scenario, the markets have rallied like never before.

Social media experts predicting doom and gloom in March are left scratching their heads.

Pfizer has announced positive news on a vaccine for the virus. The US presidential election is over.

Companies have announced favorable September quarter results.

There's however trouble on the valuations front...

As measured by the PE ratio, the Indian stock market is among the most expensive it has ever been, barring the crazy days of 1991.

But does this mean that the market won't go higher?

We believe that while the Indian economy reels under pressure, the India Story is far from over.

A lot of effort is still needed to repair the economy, as we move towards a new year.

However, this is also the best time to reassess your portfolio and load up on quality stocks as the uncertainty and volatility clears up.

Legendary investor Warren Buffett would agree when we say that only when the tide (i.e. liquidity) goes out, will investors find out which stocks were the strongest.

Your portfolio may or may not be reeling under some pressure, but now is not the time to panic. We believe investors will be far better served if the focus is on individual stocks by following a bottom-up approach to investing.

As always, we recommend buying stocks with solid fundamentals only when they are available at attractive valuations. Time will then work in your favour and provide you satisfactory returns.

In short, ignore the noise, stick to fundamentals and you should do well.

As far as our views on Indian stock markets are concerned, here are some links to videos and articles from our editors that you may find interesting:

This Diwali Consider Richa's #1 Stock Pick for 2021

This One Smallcap Stock is a Must Have in Your Portfolio

What to Expect from Stocks during Covid Second Wave?

What Should Investors Do After Sensex 43,000?

Should You Buy Gold Now?

The Death of Democracy 1.0

Markets Are Always Right?

Well that's all from us.

We once again wish all Equitymaster readers a very happy Diwali!

Happy investing.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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